Vidarbha’s steel producing companies that are employing more than 1 lakh persons are under severe stress on account of inflated power and coal charges. Most of steel manufacturers have stopped production while many others are operating below 50 per cent of their capacity.
Rajesh Sarda, President of Steel & Hardware Chamber of Vidarbha, told The Hitavada on Sunday that at present only 30-35 units are operating in the current situation. There were more than 80 units in the region a couple of years back. “For the past few years, the number of steel manufacturing units is dropping mainly because of unviable market conditions,” he said. Sarda highlighted the high power rates applicable for the manufacturers in the region, increased cost of raw material and coal.
“The steel manufacturing companies are paying more on power and coal as compared to their counterparts in adjoining Chhattisgarh. “We are buying power here in Vidarbha at a cost of about Rs 12.50 per unit but the steel manufacturers in Chhattisgarh get it at only Rs 8.50 per unit. This mismatch has created a huge difference in the trade,” he said.
Apart from this, today the manufacturers in Vidarbha are paying Rs 14,000 to Rs 15,000 per tonne for coal against its price of Rs 7,500 - Rs 8000 per tonne one and half years back.
When it comes to raw material, the manufacturers in Vidarbha are paying more than their counterparts in Chhattisgarh. “We are paying additional charges on various fronts and thus we cannot compete with the units in Chhattisgarh,” said one of the leading steel dealers who wished not to be quoted.
The production of steel is highly energy intensive, Sarda said, adding that the disparity in power rates is giving the Chhattisgarh-based manufacturers an upper hand.
Recently, R B Goenka, Vice-President of Vidarbha Industries Association, has also said the steel manufacturers need support from the Government of Maharashtra for sustainability. “Other wise industrialists will have no other option but to shut down their units and migrate to neighboring states who are offering power at a lower rate.”
The State Government had recently withdrawn the incentive scheme under which the manufacturers were given power at subsidised rates. Besides, the steel manufacturers are also paying an additional amount for buying power in the name of Fuel Adjustment Cost (FAC).